European Central Bank Continues Assessing 'Feasibility And Merits' Of Digital Currencies

The European Central Bank (ECB) is sticking to its guns on playing "an active role" in the digital currency field, said ECB’s President Christine Lagarde on Wednesday.

What Happened

The ECB will continue assessing the risks and benefits of issuing a central bank digital currency (CBDC), said Lagarde in an interview Wednesday with French business magazine, Challenges.

“We are looking closely into the feasibility and merits of a CBDC, also because it could have major implications for the financial sector and the transmission of monetary policy, Lagarde said.

Why It Matters

Lagarde’s Wednesday statement comes just a month after she said that the ECB should be “ahead of the curve” on the digital currency field.

Innovation in digital payment systems, Lagarde said in the Wednesday interview, should help meet the urgent need for faster and cheaper cross-border transactions.

Eurosystem, the monetary authority of the eurozone, in 2018 launched a pan-European instant payment system, which allows banks in European countries to transfer funds between themselves round-the-clock in a matter of seconds, said Lagarde, stressing that the ECB is already playing an active role in the digital currency field.

As for their plans, the ECB wants to develop a central bank digital currency (CBDC). This, however, should “neither discourage nor crowd out private market-led solutions for fast and efficient retail payments in the euro area,” told Lagarde to the French business magazine.

Photo Credit: World Economic Forum via Wikimedia